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Race & Home Buying In America

Race & Home Buying In America

The National Association of Realtors (NAR) recently released its study entitled "Snapshot of Race and Home Buying in America."  The entire 40-page report with charts and graphics is available by clicking HERE Below are some excerpts from the report.

Ryan Stubbings, Realtor, Property Manager, Stars & Stripes Homes, Inc., Alumni, Arizona State University Ryan@StarsAndStripesHomes.com

2021 was the best year for the real estate market in the last 15 years. Home purchases surged over the past year in an abnormal way. Even though home prices hit record highs eroding affordability, the housing market outperformed. The main driver of this booming housing market was record-low mortgage rates, as the interest rate on a mortgage has a direct impact on the size of a mortgage payment. Higher rates increase mortgage payments while higher rates typically reduce the amount of money that people can borrow. Thus, millions of people rushed to benefit from these low rates pushing up activity in the real estate market. Furthermore, pent-up demand and lifestyle shifts during the pandemic were also drivers of the housing market. While the booming housing market contributed significantly to the recovery of the U.S. economy, research has consistently shown that homeownership is also associated with multiple economic and social benefits to individual homeowners. 

Homeownership has always been an important way to build wealth. According to NAR, the net worth of a homeowner was about $300,000 while that of a renter was $8,000 in 2021. The net worth of a typical homeowner is about 40 times the net worth of a renter. In addition to tangible financial benefits, homeownership brings substantial social benefits for families, communities, and the country as a whole.

The homeownership rate for White Americans has been consistently nearly 70% since 2017. During the same period, the homeownership rate for Black Americans has been nearly 30 percentage points lower than that of White Americans – above 41% from 2017 on. For Hispanic Americans, the homeownership rate has held above 47%, and for Asian Americans, it has been above 59% over the same time period. 

White American Homeownership  70%

Asian Homeownership  59%

Hispanic Homeownership  47%

Black Homeownership  41%

Although mortgage rates dropped below 3% in 2020, not everyone had the same opportunities to get a home loan and benefit from these low rates. Data shows that Black and Hispanic homebuyers face extra challenges in getting a mortgage. Denial rates vary significantly by race/ethnic group with Black Americans having the highest denial rates for purchase and refinance loans. According to NAR’s Profile of Home Buyers and Sellers report, 7% of Black and Hispanic home buyers were denied mortgages, compared with about 4% of White and 3% of Asian applicants. While the main reason the mortgage lender rejected their application is the debt-to-income ratio, Black and Hispanic homebuyers reported that they also had a low credit score.

Black Americans Mortgage Denial Rate  7%

Hispanic Americans Mortgage Denial Rate  7%

White Americans Mortgage Denial Rate   4%

Asian American Mortgage Denial Rate  3%

The report also includes information on renters. NAR data shows that Black renter households are more squeezed than any other race/ethnic group. One in two Black renter households spend more than 30% of their income on rent. And, about 28% of the Black renter households spend more than 50% of their income on rent, representing nearly 2.3 million households. In contrast, 21% of White renter households are severely cost-burdened, spending over 50% of their income on rent. This translates to about 4.9 million white renter households. The main reason that Black renter households are more cost-burdened is that although they have a lower income (30% lower) than White renters, their monthly rent isn’t significantly lower than that of White renters. In 2020, the median income of Black renter households was $31,700, compared to $45,200 for white renter households. In the meantime, the average monthly rent was $1,010 for White compared to $830 for Black renter households.


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